Burger King Announces Additional Investment to Achieve 85%-90% Modern Image in U.S. Restaurants by 2028

Burger King Company LLC  today announced an additional $300M investment to accelerate the modernization of Burger King restaurants across the U.S. This comes after BK announced $250M in modern image, technology and new kitchen equipment in September 2022 as part of its Reclaim the Flame plan, and a further $500M to accelerate the reimaging of more than 600 Carrols Restaurant Group owned Burger King restaurants following the pending acquisition of Carrols.  

The September 2022 Reclaim the Flame plan also included $150M in incremental digital and media investments through 2024 ("Fuel the Flame") followed by an agreement with franchisees to increase their investments in advertising from 2025-2028 should certain franchisee profitability metrics be achieved.

The Brand's Reclaim the Flame investments have driven strong early results, including record average U.S. Franchisee profitability in 2023, on the path to our publicly stated goal of achieving $300,000 in average EBITDA in our BK US restaurants, as well as strong sales uplifts from the 100 Royal Reset remodels that have been completed and reopened for at least six months.

In January, Burger King announced plans to acquire Carrols, the brand's largest U.S. Franchisee, for an enterprise value of approximately $1B. To further accelerate the brand's turnaround, this was coupled with a plan to remodel approximately 600 of the over 1,000 acquired Burger King restaurants utilizing the operating cash flows of Carrols and bringing the Carrols portfolio to fully modern image by 2028. The Company expects to refranchise substantially all of the Carrols portfolio to smaller, local operators within 3 to 7 years after completion of the acquisition.

The additional $300M investment will launch an expanded co-investment program, "Royal Reset 2.0", which builds on the initial success of the existing Royal Reset modern image investments. The program will provide cash incentives to top performing and committed operators to support quality remodels and rebuilds and unlocks the opportunity to complete approximately 1,100 additional remodels through 2028.

As a result of the Royal Reset programs and planned Carrols remodels, Burger King now has a clear path to achieve 85%-90% modern image by 2028. The brand does not expect to deploy any additional capital towards co-investment remodel programs once these programs are complete. 

Tom Curtis, President of Burger King North America, commented, "We are committed to giving our Guests the very best experience in all our restaurants and that includes a modern, exciting restaurant image and digital experience that exceeds their expectations.  We are working in close partnership with our Franchisees to transform our restaurant footprint across the country and reclaim our flame as a leader in the QSR industry."

As part of the commitment to modernize restaurants across the U.S., seven months ago, BK revealed its next generation restaurant design – "Sizzle". The new design is a reimagined format grounded in all aspects of the Guest and Team Member experience and allows for flexibility to evolve the design based on new Guest service modes – with an emphasis on the digital, pick-up and drive-thru experience. Remodel projects as part of the Royal Reset 2.0 investment will feature the new Sizzle design.

Franchisees will have until October 31, 2024, to opt-in to Royal Reset 2.0 with the collective goal of modernizing the brand's image to elevate the Guest experience in Burger King restaurants across the U.S.

History of Announced Burger King Investment in the U.S. System:

*Participating Franchisees (~96% of system) have agreed to increase their advertising fund contributions by 50 basis points through 2028 if certain profitability thresholds are met (>$175,000 average trailing twelve-month franchise profitability at year-end 2024 and >$230,000 at year-end 2026).